High street suffering 'financial winter', report says

Summer may be here but the high street remains in the "grip of a deep financial winter", a report says. 

High street retailers recorded a 1.9% fall in overall year-on-year sales in May, a month after they suffered the biggest drop since the height of the recession, according to accountancy and business advisory firm BDO.

The latest numbers mean BDO's High Street Sales Tracker has shown negative growth since October 2015, apart from in January.

Lifestyle sales were down 2.4% compared with a year ago, while sales of homewares grew by just 1% year-on-year.

BDO said: "The beginning of June may have seen the first signs of summer in 2016, but figures released today show the UK high street is in the grip of a deep financial winter". It added that the numbers would have been worse had it not been for widespread promotional activity in the latter half of the month in a bid by retailers to increase footfall and shift surplus stock.

The report said consumer confidence had been knocked by a combination of factors, including uncertainty caused by the EU referendum and pressure on household budgets.

Sophie Michael, head of retail and wholesale at BDO, said May had been a bad month across the whole high street.

She said: "A fall in retail sales is often sparked by consumers choosing to spend their disposable income on things like eating out, but the evidence is that people are reducing spending across the board.

"Things have been tough for retailers since the end of last summer and there's not much to suggest confidence will pick up soon."

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